Dow Jones Forecast: DJIA falls on weak growth worries

US futures

Dow future -0.25% at 38,484

S&P futures -0.24% at 5269

Nasdaq futures -0.25% at 18566

In Europe

FTSE -0.36% at 8239

Dax -0.6% at 18501

• Stocks fall on concerns over the US economy’s health
• US job openings & factory orders are due
• Oil falls for a 6^th straight day to a 4-month low

Stocks fall as weak growth fears rise

U.S. stocks are set to open lower as the market mood sours on concerns of sluggish growth.

US ISM manufacturing data today sparked concerns over the strength of the US economy. The manufacturing PMI fell for the second straight month, and construction spending also dropped, suggesting that the Federal Reserve’s monetary policy is applying brakes and slowing the economy.

The data comes after a string of recent macro releases showing an economy that has slowed more than expected, prompting a risk-off response from investors, even if this means that the Federal Reserve could start to cut interest rates sooner. The market is pricing in a 62% chance of the Fed cutting rates in September, up from 50% last week.

Several key releases are in focus, which could provide further clues about the health of the US economy and, more particularly, the labor market. The US job openings survey, which is due later today, is ahead of Friday’s non-farm payroll report.

Corporate news

Intel is set to open higher after the company announced a new AI chip to compete with those from Nvidia and AMD. Intel has fallen 40% year to date, and its rivals, Nvidia and AMD, are up 132% and 11%, respectively.

Mata and Snap are expected to open lower on reports that New York is considering banning social media companies that use algorithms to steer content to children without parental consent.

GameStop is in focus again after a 21% rally on Monday amid speculation that meme stock trader Keith Gill could be holding a major position in the stock.

Bath and Body Works is set to open 9% lower after beating first-quarter earnings and revenue. However, the retailer revealed disappointing guidance for the current quarter. It expects earnings to range between $0.31 to $0.36 a share, below estimates of $0.38.

Dow Jones forecast – technical analysis.

After failing to rise above the 100 SMA, the Dow Jones has eased lower and is testing support at 38,500, the March low. Sellers, supported by the RSI below 50, could look to extend losses below 38,000, last week’s low. Below here, 37,700, the May low comes into focus. On the flip side, should 38,500 hold, buyers could look to retake the 100 SMA at 38,700 before extending gains towards 39,284, the February high.

FX markets – USD rises, GBP/USD falls

The USD is recovering after falling to a two-month low versus its major peers in the previous session. The recovery comes ahead of key data today, which could determine whether yesterday's losses after the manufacturing figures are the start of a new trend. The data comes ahead of Thursday’s nonfarm payroll.

EUR/USD is falling in risk-off trade, and after German unemployment showed that joblessness rose by 25,000 ahead of the 7000 expected, underscoring expectations that the eurozone's largest economy will only recover gradually this year.

GBP/USD is falling amid a stronger U.S. dollar and as BRC retail sales rose by less than expected. Sales rose 0.4% after dropping 4.4% in the previous month; however, this was below expectations of 1.2%. The data comes as consumer credit Card spending spirit slows, and households remain squeezed.

Oil tumbles for a 6th day

Oil prices are falling for a fourth straight day, dropping to a four-month low on a combination of worries surrounding slower growth and expectations of rising supply later in the year.

The OPEC+ group agreed on Sunday to extend most of its output cuts into 2025 but left room for voluntary cuts to be gradually unwound as of October. This means that increased supply later this year would come at a time when demand is already showing signs of weakness.

US manufacturing activity slowed for a second straight month in May, and construction spending in April fell unexpectedly, both of which could result in weak oil and fuel demand. Signs of economic weakness may lead to lower oil prices lower.

US government inventory data will be released later.